What Is a Seal of Approval? Understanding Common Seals in Australian Business Law

Wondering what a “seal of approval” really means for your company? You’re not alone.

Common seals may sound old‑fashioned, but they still pop up in Australian business life - especially when companies want a clear, visual mark that a document has been formally approved.

In this guide, we’ll explain what a seal of approval is, whether modern companies still need one, how seals interact with signatures and e‑signatures, and when a seal can still be useful. By the end, you’ll know if your business should adopt a seal - and how to use one properly if you do.

What Does “Seal Of Approval” Mean For Australian Companies?

In business, a “seal of approval” usually refers to a company’s common seal.

A common seal is a physical stamp or embossing tool bearing the company’s legal name (and often its Australian Company Number, or ACN). When a company affixes its seal to a document, it’s a traditional way of showing the company’s formal approval or execution of that document.

Historically, the seal was the company’s “signature”. Today, it’s optional for most companies, but some still use one for ceremony, tradition, or to meet counterparties’ expectations - particularly in cross‑border matters.

Do Companies Still Need A Common Seal Under The Corporations Act?

In most cases, no.

Under the Corporations Act 2001 (Cth), companies can execute documents with or without a common seal. The key is that the right people approve and sign under section 127. In practice, that means:

• Two directors; or
• One director and one company secretary; or
• For a proprietary company with a sole director (with or without a company secretary) - the sole director.

These section 127 rules apply whether you’re signing physically or electronically. They also provide a “statutory assumption” for people dealing with your company - in other words, counterparties can assume the document is properly executed if it follows these signing blocks.

If you’d like a deeper dive on the mechanics, have a look at signing documents under section 127.

What About Deeds And Sole Director Companies?

Reforms to the Corporations Act made the modern execution rules permanent. Companies can execute deeds without a common seal by using section 127 signing options. For proprietary companies with a sole director, the sole director can sign on behalf of the company (whether or not there’s a company secretary).

This streamlines execution - including for deeds - and means many companies no longer need to rely on a seal for validity.

Can We Use Electronic Signatures Instead Of A Seal?

Yes - for most company documents. The Corporations Act allows electronic execution methods that identify the signatory and indicate approval (for example, reputable e‑signature platforms) when used properly. For context on when “wet ink” is still needed versus e‑signatures, see this overview of wet ink vs electronic signatures.

When Might A Constitution Still Require A Seal?

Some constitutions (particularly older ones) include rules about seals. If yours says a seal is required in specific cases, you’ll need to follow those rules unless you amend the constitution.

If you’re unsure, check your Company Constitution or speak with a lawyer about updating it to reflect current execution practices.

How Do You Use A Common Seal Properly?

If your company adopts a seal, make sure there’s clear governance so it’s used correctly and securely.

Set Clear Internal Rules

Start by documenting when the seal may be used and who can authorise it. Many boards adopt a simple policy (or rely on constitutional rules) that cover:

• Who may access and safeguard the physical seal.
• When seal use is appropriate (e.g. specific document types or on request by a counterparty).
• Who must be present or sign when the seal is affixed.
• How use of the seal is recorded (e.g. an entry in a register).

It’s common to require a board or director approval before the seal is applied. If your board prefers a formal paper trail, a short board minute or a Director’s Resolution will do the job. If you need a starting point, Sprintlaw offers a Director’s Resolution Template.

Affixing The Seal

When the seal is used, best practice is to:

1. Place the seal on the document so it clearly displays the company’s name (and ACN, if included on the seal).
2. Have the required company officers sign next to the seal (for example, two directors; or a sole director for a proprietary company), if your constitution or policy requires it.
3. Log the use in a register (date, document, purpose, who authorised it).

If witnessing is required by your internal rules or the counterparty, make sure the witness understands their role and the identity of the signers. For general witnessing rules in Australia, see who can witness a signature.

Store The Seal Securely

Treat your seal like you would a chequebook: restrict access, keep it locked away, and know exactly who is responsible for it. Unauthorised use can create headaches (and potentially serious legal issues) - good controls minimise the risk.

Good Governance Tip

Keep your board minutes, approvals and register tidy and consistent. If anyone questions the authenticity of a sealed document later, your records will quickly demonstrate proper authorisation and process.

Common Seal Vs Signatures And E‑Signatures: What’s Legally Effective?

In modern Australian law, a seal is rarely required for validity. A document executed in accordance with section 127 - by the right officers, in the right format - is generally just as effective as using a seal.

Here’s a quick comparison to help you decide what’s right for your situation:

• Using a seal: Adds ceremony and a clear visual “mark” of corporate approval. Some overseas counterparties still expect it. It can be a helpful extra step where tradition matters.
• Using signatures under section 127: The default, reliable path. Statutory assumptions protect counterparties, and it works for most contracts and deeds.
• Using e‑signatures: Efficient and accepted for most company documents when implemented correctly. Many businesses now execute all routine contracts electronically.

For many companies, a seal is a “nice to have” rather than a “must have”. If your constitution is silent on seals, you can stick to section 127 signatures and e‑signatures for day‑to‑day business and keep a seal on hand only if a counterparty specifically asks for it.

What About Share Certificates, Deeds Or International Deals?

Some companies place the seal on ceremonial or governance documents (for example, share certificates) as a matter of tradition or internal policy. If you’re handling equity paperwork, it’s worth being across the basics of share certificates and how you transfer shares in a private company.

For deeds, you can rely on section 127 execution, without a seal. If a foreign counterparty prefers a sealed deed, that’s a commercial preference - not a standard Australian legal requirement. It’s okay to agree to affix the seal if it helps the deal progress, provided your internal rules are followed.

If you’re unsure whether a document should be a deed (as opposed to an agreement), this primer on what is a deed is a useful refresher.

When Is A Seal Of Approval Still Helpful?

You don’t need a common seal for everyday contracts. That said, there are sensible situations where a seal can still add value.

1) Cross‑Border Counterparties Expect It

Some foreign companies, banks or authorities prefer (or expect) a physical seal on documents. If adding your seal speeds up acceptance abroad, it can be worth using - as long as your internal policy and governance are followed.

2) Internal Policy Or Tradition

Many boards like the added formality of sealing specific documents (such as major financing agreements or important board minutes). This is a cultural and governance choice, not a legal necessity.

3) Constitution Specifically Requires It

If your constitution expressly requires the seal for certain acts, follow it - or consider amending those rules so they reflect modern execution options. Your Company Constitution is the place to start.

4) Ceremonial Documents

For example, you might seal share certificates or commemorative documents to underscore authenticity and formality. It’s optional, but some stakeholders appreciate the tangible mark.

Note: Appointing a public officer is a separate tax administration step for companies and isn’t a reason to use a common seal. Speak with an accountant or tax adviser about your obligations if you’re appointing a public officer.

Key Takeaways

• A “seal of approval” refers to a company’s common seal - a physical stamp or emboss that shows formal corporate approval on a document.
• Most Australian companies don’t need a common seal to execute documents; section 127 of the Corporations Act lets you sign with the right officers instead (including sole director proprietary companies).
• E‑signatures are widely accepted for company execution when used correctly. A sealed document is rarely required for validity in Australia.
• Seals still have practical uses - mainly for international dealings, internal policy, or ceremonial documents like share certificates - but they’re optional unless your constitution says otherwise.
• If you adopt a seal, set clear governance: authorisation rules, secure storage, and a register of use. Keep board approvals and minutes tidy.
• Review your core governance documents - your Company Constitution, board approvals, and any deed or equity paperwork - and use section 127 signing blocks or a seal consistently and correctly.

If you would like a consultation on common seals, proper execution under section 127, or updating your company documents, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.